I. remittance
Remittance, also known as remittance, means that the payer voluntarily pays the goods to the exporter through the bank. The buyer has three different remittance methods:
(1) remittance (referred to as remittance)
Remittance means that the importer (remitter) gives the payment to the local bank (remitter), and the remitter entrusts the exporter's local bank (remitter) to pay the exporter (payee) by letter.
(2) telegraphic transfer (telegraphic transfer for short)
T/T means that the importer asks the local bank to entrust the local bank of the exporter to pay the exporter by telegram or telex. The cost of telegraphic transfer is higher than that of letter transfer, but the exporter can receive the payment quickly.
(3) Made usance draft
Draft remittance refers to a remittance method in which an importer buys a bank draft from a local bank, the importer sends it to the exporter himself, and the exporter goes to the bank designated on the draft (usually the branch or agent bank of the remittance bank) to withdraw money.
Remittance is divided into the above three ways according to the different tools used, and it is divided into two situations according to the different time: prepayment and cash on delivery:
1. Advance payment
Prepaid payment means that the importer will remit part or all of the payment to the exporter first, and the exporter will deliver the goods within the specified time after receiving the payment.
2. Pay after delivery.
Cash on delivery means that the exporter delivers the goods first and the importer pays after receiving all the qualified goods.
Remittance mode evaluation
Remittance is a simple and quick payment method, but the use of remittance depends entirely on the mutual trust between importers and exporters, so it belongs to commercial credit. Under the remittance mode, whether the seller delivers the goods after receiving the payment and whether the buyer pays after receiving the goods depends entirely on the commercial credit of the buyer and the seller. It can be seen that under this payment method, there is always the risk that one party will occupy funds, lose interests and bear the risks of both goods and money. In international trade, this method is mainly used for advance payment, down payment, installment payment, deferred payment, small transaction payment, payment mantissa, payment fee difference and commission payment.
Two. collection
Collection refers to a payment method in which the creditor (exporter) issues a draft and entrusts the bank to collect the payment from the debtor (importer).
(A) the collection method of the parties
1. Principal. A customer who entrusts a bank to handle collection business, usually an exporter.
2. Remittance bank. Refers to the bank entrusted by the principal to handle the collection business.
3. Receiving bank. Refers to the import bank that accepts the entrustment of the collecting bank to collect the fare from the payer. The collecting bank is usually a foreign branch or correspondent bank of the collecting bank.
4. Prompt the bank. Point to the bank where the drawee presents bills of exchange and documents.
(2) Collection type
Collection can be divided into clean collection and documentary collection according to the different bills of exchange used, and documentary collection is mostly used in international trade. As far as documentary collection is concerned, it can be divided into D/P and D/A according to different presentation conditions:
1. D/P (D/P for short).
This means that the exporter's prompt is conditional on the importer's payment. That is, after delivery, the exporter obtains the freight documents, entrusts the bank to handle the collection, and instructs the bank in the collection letter that the freight documents can only be handed over to the importer after the importer pays the payment.
According to the different payment time, D/P can be divided into D/P at sight and D/P at future:
(1) D/P at sight (D/P at sight for short)
It means that the exporter draws a sight draft together with the shipping documents after delivery, and the importer presents it to the importer through the bank. The importer pays the bill immediately after seeing it, and receives the shipping documents from the bank after paying the payment.
(2) see the payment documents after the ticket.
It means that after delivery, the exporter issues a time draft together with the freight documents, which are presented to the importer through the bank, and the importer checks and accepts the draft, and receives the freight documents after paying off the payment on the due date of the draft.
2. D/A
This means that the exporter's presentation is conditional on the importer's acceptance of the draft. That is, after the goods are shipped, the exporter draws a time draft together with a freight bill and presents it to the importer through the bank. After the importer accepts the bill of exchange, the collecting bank will hand over the freight bill to the importer before fulfilling the payment obligation. D/A is only applicable to the collection of time draft. Because D/A is the importer's acceptance bill, you can get the shipping documents and take delivery. In other words, the exporter has handed over the title certificate, and the guarantee for its collection depends on the credit of the importer. Once the importer fails to pay at the due date, the exporter will suffer all the losses of goods and payment. Therefore, exporters are generally very cautious about accepting this method.
(3) the nature, advantages and disadvantages of collection
The essence of collection is commercial credit. When handling the collection business, the bank only acts according to the instructions of the client and has no obligation to pay the payer.
Documentary collection is risky to exporters, but beneficial to importers. It can not only avoid the procedure of applying for opening a letter of credit, but also reduce expenses and expenses, which is conducive to financing and turnover. Because collection is beneficial to importers, the use of collection in export business is conducive to mobilizing the enthusiasm of importers to purchase goods, promoting transactions and expanding exports. Therefore, many exporters regard collection as a means to promote inventory and strengthen foreign competition.
(4) the international practice of collection
It is the publication No.522 of the International Chamber of Commerce, Uniform Rules for Collection (that is, Publication No.522). The existing rules came into effect on 1996 1.
Problems that should be paid attention to when using the collection method:
1. To truly understand the importer's credit status and business style;
2. Understand the trade control and foreign exchange control laws and regulations of the importing country;
3. Understand the business practices of the importing country;
4. The export contract shall be signed in accordance with CIF terms;
5. For collection transactions, a sound management system should be established.
Three. letter of credit (L/C)
(A) the meaning of the letter of credit
Letter of credit is a certificate issued by the issuing bank to the beneficiary according to the applicant's requirements and instructions, promising to pay with the specified documents within a certain amount and within a certain period. In short, a letter of credit is a conditional written document issued by a bank to promise payment. The condition here means that the beneficiary must submit various documents that meet the requirements of the letter of credit.
(2) The parties to the letter of credit
1. The applicant is also called the issuer.
2. Issuing bank.
3. Notify the advising bank.
4. Beneficiaries.
5. negotiating bank.
6. Paying bank.
(3) General procedures for payment by letter of credit
1. application for opening a letter of credit: the importer applies to the local bank, pays the deposit or provides other guarantees according to the contract, and requires the bank (issuing bank) to open a letter of credit to the exporter.
2. Opening a letter of credit: After accepting the importer's application for opening a letter of credit, the issuing bank will open a letter of credit and send the original letter of credit to the branch or correspondent bank (advising bank) where the exporter is located.
3. Notify or forward the letter of credit: notify the bank to forward the letter of credit to the exporter (beneficiary).
Negotiation: After receiving the letter of credit, the exporter should carefully check whether it is in conformity with the contract. If any discrepancy is found, the importer may be required to amend the letter of credit through the issuing bank or refuse the letter of credit. If the letter of credit is correct, the exporter will load the goods and prepare the corresponding complete documents. The exporter associates the documents with the letter of credit to the bank negotiation or the agent, negotiation or confirmed bank payment designated by the issuing bank. The paying bank, negotiating bank or confirming bank will prepay or pay after checking that the documents are in conformity with the letter of credit. If it finds that the files are inconsistent, it can refuse to accept them.
5. After accepting the documents, the paying bank, negotiating bank or confirming bank shall cancel the amount paid on the back of the letter of credit (namely endorsement), send the documents to the issuing bank or its designated payee, and claim compensation from the issuing bank or its designated reimbursing bank. Documents are generally sent in two batches to avoid being lost in the middle.
6. After receiving the documents, the issuing bank shall check whether they are in conformity with the letter of credit, and notify the exporter or.
Agency payment, negotiation with bank or confirmation, etc. And notify the importer of the payment exchange form at the same time.
(four) the main contents of the letter of credit
1. Description of the letter of credit itself: the type, number, amount, validity period, place of invalidation, names and addresses of the parties concerned in the letter of credit, etc.
2. Description of goods: name, specification, brand, quantity, packaging, unit price, shipping marks, etc.
3. Shipping conditions: including mode of transportation, port of shipment (place), port of destination (place), date of shipment, partial shipment or transshipment, etc.
4. Requirements for documents: explain which documents should be attached, the specific requirements for relevant documents and the number of copies to be issued.
5. Special terms: generally written on the back, indicating the delivery date or requiring special documents.
6. Responsibility sentence: the responsibility sentence of the issuing bank to ensure payment to the beneficiary, that is, the holder.
(V) Characteristics of the letter of credit
According to the uniform practice of documentary credits, letters of credit mainly have the following characteristics:
1. Letter of credit is a kind of bank credit.
The payment method of letter of credit is guaranteed by bank credit, so the issuing bank should bear the main payment responsibility. According to the uniform customs of documentary credit, in the letter of credit business, the payment responsibility of the issuing bank to the beneficiary is primary and independent. Even if the issuing bank loses its solvency afterwards, as long as the documents submitted by the exporter meet the terms of the letter of credit, the issuing bank must bear the responsibility for payment.
The letter of credit is an independent document.
The letter of credit is based on the sales contract, but once it is issued, it becomes a contract independent of the sales contract. The rights and responsibilities of the parties to a letter of credit are entirely based on the terms of the letter of credit and are not bound by the sales contract.
3. Letter of credit is a kind of document sale.
Letter of credit business is "documentary business". Banks only handle letter of credit business with documents, regardless of the real situation of the goods. The bank decides whether to pay according to whether the documents submitted by the beneficiary meet the terms of the letter of credit. If the issuing bank refuses to pay, it must also be based on the discrepancies in the documents. This "conformity" must be "strict conformity", which requires not only the consistency of documents, but also the consistency of individual documents.
(6) Types of letters of credit
1. According to whether there are shipping documents, it can be divided into documentary letter of credit and clean letter of credit:
Documentary letter of credit is a letter of credit paid by documentary draft or only by documents. Documents refer to documents that represent the ownership of goods or prove that goods have been delivered. A clean letter of credit refers to a documentary letter of credit paid by draft. Documentary letters of credit are usually used in international trade.
2. According to the different responsibilities of the issuing bank, it can be divided into revocable letter of credit and irrevocable letter of credit.
Revocable letter of credit refers to the letter of credit that the issuing bank has the right to cancel or modify at any time without the consent of the beneficiary or prior notice to the beneficiary before negotiation by the negotiating bank. This kind of letter of credit lacks the protection of the beneficiary, so it is not often used in practical business. Irrevocable letter of credit means that once a letter of credit is issued, the issuing bank cannot unilaterally modify or cancel it without the consent of the beneficiary and the parties concerned within its validity period. As long as the documents provided by the beneficiary conform to the provisions of the letter of credit, the issuing bank must fulfill its payment obligations. This letter of credit is clearly marked "irrevocable". This letter of credit is adopted by foreign-invested enterprises because of its high bank credit and better protection of the rights of beneficiaries.
3. According to whether the letter of credit is confirmed by other banks, it can be divided into confirmed letter of credit and unconfirmed letter of credit.
Confirmed letter of credit means that in order to ensure the safe receipt of foreign exchange, exporters require that the letter of credit issued by the issuing bank must be guaranteed by another bank. A bank that confirms a letter of credit is called a confirming bank. Once confirmed, the confirming bank bears the same payment responsibility as the issuing bank. Confirming banks are usually advising banks, and sometimes they can also be other banks or third-country banks in the place of export. A letter of credit that has not been confirmed by other banks is an unconfirmed letter of credit (unconfirmed letter of credit).
4. According to the different payment time, it can be divided into sight letter of credit and forward letter of credit.
A sight letter of credit is a letter of credit payable at sight. That is, the issuing bank or the paying bank will pay immediately after receiving the documentary draft and shipping documents that meet the terms of the letter of credit. This is a letter of credit commonly used in international payment and settlement. Not requiring a letter of credit means that the issuing bank does not pay immediately after receiving the draft and documents that meet the terms of the letter of credit, but goes through the acceptance procedures and pays after the draft expires.
5. According to different application methods, it can be divided into transferable letter of credit, non-transferable letter of credit and revolving letter of credit.
Transferable letter of credit refers to the letter of credit issued by the issuing bank with the word "transferable" written on it, and the beneficiary can transfer it in whole or in part to the second beneficiary. The transferable letter of credit can only be transferred once, and the transfer fee is borne by the first beneficiary, but it can be transferred to one or more second beneficiaries at the same time. Any letter of credit that is not marked "transferable", that is, the beneficiary cannot transfer the rights of the letter of credit to others, is a non-transferable letter of credit, and most of them are in actual business.
Revolving letter of credit means that when the beneficiary uses up all or part of the amount in the letter of credit, the amount can be restored to the original amount, and can be used again by the beneficiary, even for many times, until the specified number of times or the accumulated total amount is reached. The difference between revolving letter of credit and ordinary letter of credit is that the former can be reused, while the latter will be invalid after being used once. Revolving letters of credit are applicable to long-term supply contracts with unified delivery in batches.
(7) International practice of letters of credit
The International Chamber of Commerce revised the Uniform Customs and Practice for Commercial Documentary Credits in 195 1, 1962, 1974, 1983 and 1993. The current Uniform Customs and Practice for Documentary Credits is called the publication No.500 of the International Chamber of Commerce.
Fourth, bank guarantee.
(A) the meaning of bank guarantee
Letter of guarantee (L/G), also known as letter of guarantee, refers to a written credit guarantee certificate issued by a bank, insurance company, guarantee company or individual (guarantor) to a third party (beneficiary) at the request of the applicant. The guarantor shall be liable for the debts or obligations of the applicant.
Immediate guarantee and conditional guarantee.
(2) Types of bank guarantees
Bank guarantees can be divided into three types according to their uses: bid guarantee, performance guarantee and repayment guarantee:
1. Bid bond
2. Performance of the contract guarantor
3. repayment guarantee
(three) the main contents of the bank guarantee
1. interested parties
2. Liability clause
3. Validity of the letter of guarantee
4. Expiry date of the guarantee.
5. Modification of the letter of guarantee
Verb (abbreviation of verb) the choice of various payment methods
(A) the combination of letters of credit and remittances
There are two specific ways to do this:
First of all, part of the payment is paid by letter of credit and the balance is settled by remittance. That is, the importer will first open a letter of credit to pay a certain percentage of the invoice amount, and the rest will be paid by remittance according to the inspection results after the goods arrive at the destination. When this method is adopted, it should be clearly stipulated what kind of letter of credit and remittance methods should be adopted and the proportion of payment by letter of credit to prevent disputes and disputes.
The second is to remit part of the payment first, and the balance will be paid by the importer when the exporter delivers the goods. This is mainly used for transactions that require a down payment (such as transactions of complete sets of equipment). When the transaction is completed, the importer shall pay the deposit by remittance and the balance by letter of credit.
(2) the combination of letter of credit and collection
Such part of the payment is paid by letter of credit and the balance by collection. In this way, the invoice and other documents are not separated, and they are still filled in according to the total payment, but the exporter must issue two drafts, which are used under the letter of credit and collection respectively. In order to reduce the risk, part of the payment under the general letter of credit is paid by clean bill, and the collection is by documentary collection. In addition, it can be stipulated in the letter of credit that payment is only made at the importer's place.